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Posted at June 30, 2014, by Raleigh Addington, Comments Off on Keynote speaker John Hulsman on understanding risk tolerance

Dr John Hulsman, senior columnist at City A.M., discusses risk tolerance, and argues that if investors want to predict the future evolution of geopolitical situations – the US’s involvement in Iraq, Europe’s relationship with Ukraine, and Iran’s nuclear programme deal – they would do worse than to understand human psychology.

Working with psychotherapist Lara Palay, John fuses her expertise with foreign policy analysis, pointing out to investors that the links between the two crucially determine how risk analysis works. They argue that one of the central elements of a human personality is the ability to tolerate the unknown; all humans desperately need to feel in control, and that to feel safe means being reasonably able to predict the future.

Consequently, they believe that “relative tolerance of uncertainty (and its immediate implication, risk) determines how open one will be to trying new things, trusting others, or compromising. Crucially, nations – composed of human beings – naturally reflect this trait. More than anything else, a nation’s specific risk tolerance explains its overall foreign policy orientation, serving as the vital bridge between ideology and action, as they translate a country’s feelings about the world into practical analysis.”